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GM auto workers (Dave Kaup)
GM auto workers (Dave Kaup)

Truck sales roar back Add to ...

An overdependence on trucks got the Detroit Three into the ugliest mess in their history, but now those same vehicles are leading a rebound that has Chrysler Group LLC, Ford Motor Co. and General Motors Co. regaining market share in Canada and posting big gains in the United States.

U.S. sales bounced to a seasonally adjusted selling rate of about 12.5 million last month, led by gains in truck sales for all the Big Six auto makers in that market. Canadian sales edged ahead 4 per cent, with trucks grabbing their highest market share on record.

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The sales figures in both countries offer another indication that the North American economy is on the road to recovery and some evidence that buyers of commercial vehicles are becoming more confident.

"The financial crisis really hammered the tradesmen," who are key buyers of pickup trucks and other light commercial vehicles, said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. "They're coming back."

The rise in the sales of trucks - a category that includes sport utility vehicles, crossovers, minivans and pickups - also shows that so far, auto buyers are shrugging off the threat of higher prices at the pump, as oil veers towards $100 (U.S.) a barrel.

Across the industry in both Canada and the United States, several auto makers reported buoyant truck sales, but passenger car deliveries rose less vigorously.

Ford, Chrysler and Honda Motor Co. Ltd. each said their U.S. passenger car sales fell in January while truck sales soared by double digits. Nissan Motor Co. Ltd. and Toyota Motor Corp. both said truck sales increased by a higher percentage than passenger car sales.

Trucks grabbed 62 per cent of the market in Canada last month and still represent a Detroit Three stronghold.

The Japan-based manufacturers, on the other hand, are tilted more toward passenger cars and some of them had an ugly month. Sales for Honda Canada Inc., for example, plunged 37 per cent in January, with passenger car sales down 50 per cent.

Jerry Chenkin, executive vice-president of Honda Canada, said the auto maker noticed sales slipping and "therefore, we took corrective sales and marketing action toward the end of the month to provide enhanced value for our products."

Toyota Canada Inc. bucked the trend, posting higher car sales, but an overall drop of 2 per cent.

The trend toward higher truck sales in the U.S. market and the boost in sales rates in the past four months and higher transaction prices are all positive signs, said George Magliano, director of automotive research for North America for consulting firm IHS Global Insight.

The upswing is being propelled by more than trucks, Mr. Magliano noted. "It's been skewed more toward retail and away from fleet, it's also been skewed to the upper end of the model range for the products offered and it's also been driven a lot by the new products that are coming out."

"We think that January signalled a good start to the year for us, for the industry and we think it's a good sign for the overall U.S. economy," Don Johnson, GM's vice-president of U.S. sales operations told analysts and reporters on a conference call.

Emily Kolinski Morris, Ford's senior U.S. economist, was a little more subdued, but also optimistic.

"On balance, there is a very positive cycle now under way of rising demand, higher production and modest employment gains that should support a favourable business environment in 2011," Ms. Kolinski Morris said during Ford's conference call.

Worries among some U.S. drivers about higher gas prices helped spark higher retail sales of Ford's Fiesta subcompact and Focus compact, said chief U.S. sales analyst George Pipas.

But Ford's overall car sales fell by a fraction while truck sales jumped 25 per cent and SUV and crossover sales rose 17 per cent.

In Canada, Chrysler, Ford and GM captured 50.1 per cent of the market in January, up from 46.8 per cent in January, 2009.

Follow on Twitter: @gregkeenanglobe

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